International Trade Commission Lacks Jurisdiction Over Regulating Electronic Data under the Tariff Act

In ClearCorrect Operating, LLC, ClearCorrect Pakistan (Private), Ltd. v. International Trade Commission, Align Technology, 2014-1527 (Fed. Cir. November 2015) (Available Here), the Federal Circuit found that the International Trade Commission (“ITC”) did not have jurisdiction over the case, because ITC did not have authority to regulate “electronic transmission of digital data” under the guise of “articles” prescribed in the statute.

The Tariff Act of 1930 gives the International Trade Commission authority to remedy only those unfair acts that involve the importation of “articles” as described in 19 U.S.C. 1337(a). The ITC began an investigation based on a complaint filed by Align concerning violation of 19 U.S.C. 1337. Align contended that ClearCorrect infringed various claims of seven different patents covering orthodontic devices. The technology at issue in this case relates to the production of orthodontic appliances known as aligners. The aligners are to be placed successively on the patient’s teeth to incrementally reposition the teeth. ClearCorrect was scanning the physical model of the patient’s teeth, which was then electronically transmitted to ClearCorrect Pakistan. ClearCorrect Pakistan created digital models of intermediate and final tooth position where one intermediate tooth position is created for each incremental aligner. ClearCorrect Pakistan then transmitted these digital models electronically to ClearCorrect US where the models were 3D printed into physical models and then manufactured by thermoplastic molding using the physical model.

The accused “articles” that ITC was attempting to regulate were the transmission of the “digital models, digital data and treatment plans, expressed as digital data sets, which are virtual three-dimensional models of the desired positions of the patients’ teeth at various stages of orthodontic treatment” from Pakistan to the United States. ITC exerted its authority over ClearCorrect Pakistan as a contributory infringer for importing the data models in violation of Section 337.

The Federal Circuit reversed, holding that the Commission lacked jurisdiction. The Federal Circuit found that the Commission’s decision to expand the scope of its jurisdiction to include electronic transmissions of digital data runs counter to the “unambiguously expressed intent of Congress” citing to Chevron, U.S.A., Inc. v. Natural Res. Def. Council, Inc., 467 U.S. 837, 843 (1984). The Federal Circuit held that the literal text by itself was clear and that the plain meaning of “articles” is defined as “material things,” thus “articles” does not extend to electronic transmission of digital data. The clarity of the statutory context obviated the need for the Court to turn to the legislative history. Even so, the Court found the legislative history further confirmed the conclusion that “articles” is limited to “material things.”

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